Couple interested in rentals and flipping with no money down

Couple interested in rentals and flipping with no money down

Flipper/Rehabber · Colorado Springs, CO · Member since 2016 · 5 posts · 0 votes

Hello bigger pockets community! My name is Maddie and my husband is Patrick. We are from the western slope in Colorado. I am currently a homemaker but help manage my dads rental property and have worked for a property management company as a receptionist. My husband is going to school for construction management and works for a small business building homes and doing remodels. We are excited to started educating ourselves as we have over the last couple weeks in real estate investing. We only currently make enough money to survive living with family as we have 3 (almost 4) children and since he goes to school and his job only pays him $10/Hr at 30 hrs a week. We look forward to starting and learning and hope that soon we can jump right in although I will say we are nervous especially because of the lack of funds.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y

@Madeline Shawcroft  one must be realistic.. the picture you paint Is not super conducive to explosive growth in RE.

one suggestion is one of you may want to get a RE license and work part time.. get in the game. it cost about 1k to get that.  And if there are any big teams there in that area you get on one of those and let them mentor you... build up some reserves and then move forward.

as others state  not wanting to be a Debbie downer however those that make millions starting out with nothing is akin to winning the lottery does it happen for sure.. is it common place NO way.

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  • Real Estate Agent · Longmont, CO · Member since 2015 · 47 posts · 6 votes
    10y

    Welcome to BP Maddie and Patrick!  BP is a great source of information to educate yourselves on the ins and outs of investment properties.  Your husband is in a good line of work as the demand for new construction is great right now, especially along the front range.  If there is any way I can help, let me know.

    Sean Gilliam

  • Investor · Plano, TX · Member since 2016 · 38 posts · 21 votes
    10y

    You might want to read this book:

    http://get.biggerpockets.com/nomoneydown/

  • Investor · Springfield, MO · Member since 2016 · 88 posts · 29 votes
    10y

    I'm not really sure it would even be feasible with no money to invest. You're going to be pretty hard pressed to find a lender without at least 20% down and six months reserves in the bank or retirement fund. I would venture to guess your debt to income ratio is pretty high as well, which will hurt you. Trying to find a private investor(s) will only eat up any kind of profit to be made. Your best bet would probably be a loan from a family member or close friend. The saying, "It takes money to make money" rings pretty true when it comes to investing in property. 

  • Specialist · Baltimore, MD · Member since 2016 · 388 posts · 318 votes
    10y

    I'm not sure I agree with Matt. Real Estate, just like any other business, is more about who you know and if you can sell, than who has the most cash on hand.

    Does having cash help? Immensely, and is the preferred way to invest in RE. However, it is not the only way. 

    Yes, getting an FHA loan will be hard with a high debt-to-income but that's where asset-based loans come into play.

    No money down can happen as well. If the seller is willing to carry the note, you can purchase with no money down. 

    Also, I've heard that wholesaling is a lower barrier to enter the RE game although, I don't know much about it since I don't wholesale. 

    I'd say the best thing you can do is read the book in the link above, keep reading the forums and keep your goal in the front of your mind. Talk to everyone and always mention that you are an investor. You'd be surprised at what turns up for opportunities.

    By all means, none of this is easy or we would all be filthy rich. It will take a lot of work and a long time....especially in CO. 

  • Investor · Springfield, MO · Member since 2016 · 88 posts · 29 votes
    10y

    I don't know anything about wholesaling, so maybe Russell is correct. 

    You will have no cash flow with an FHA a loan and 3% down. Without 20% the cash flow wouldn't even be worth it. Trust me, I know. I'm in the process of refinancing my primary residence so we can turn it into another rental in a year. Even with a .75% better interest rate, 80% LTV and dropping PMI, it's still not going to be great for cash flow. The COCR is good, so that's why we're doing it.

    In my location a $100,000 house would have a total payment around $725/month. Max rent would be $800, $825 at the most. That's $900/year cash flow. Water heater goes bad, there goes your years profit. That's just one of the MANY things that could go wrong and cost money to fix. If things don't get fixed they might not be able to rent it. If they can't rent it that's $725/month that just came out of their pocket. If they're already having a tough time making ends meet, that rental could eat their lunch in no time. 

    I'm not trying to be negative or discourage their dreams, just trying to be a realist and shoot them straight. If Madeline has experience in property management, maybe she should focus on that. Maybe look at forming her own property management company? She'll make plenty of contacts that might set her up for future investing and good deals. It would be a lot safer and require less money. I would think it could even be done out of her home to start with. It sounds like you would already have your first client(Dad), so that's a nice way to start out a new business.

    Good luck!

    Matt

  • Flipper/Rehabber · Colorado Springs, CO · Member since 2016 · 5 posts · 0 votes
    10y

    thanks guys for all the tips. One of our main focuses right now is getting our car paid off which aside from student loans is the only debt we have. We personally would rather take a smaller profit from a flip than not flip at all. Any profit is profit to us right now. Ha. I believe that in CO you have to have a real estate license to be able to manage property officially. I've thought about becoming an agent or broker because it would be a great in but that also costs money. We might look into later after getting our debt paid off. 

    To us wholesaling just sounds scary with so many chances to mess up and get in a legal situation. I know if We learned everything it might work but I don't know if we are really comfortable with it. 

    I'll definitely mention that we are investors to everyone. We do know some people with money but we don't even know a good way to approach them about investing. Have any of you guys done this?

    We are going through the free course and then will be getting some of the books. If anyone has a hard copy they wouldn't mind parting with let me know. 

  • Specialist · Baltimore, MD · Member since 2016 · 388 posts · 318 votes
    10y

    @Madeline Shawcroft Also, look through old podcasts on this site and connect with those people. I listened to one a few days back where a lady went from being something like 600K in debt to owning 100 doors...or something to that effect. People like that will definitely have a few tricks up their sleeves. Even though you don't have much disposable income, doesn't sound like you are in much debt so you might be in a better position than you think. 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Madeline Shawcroft  one must be realistic.. the picture you paint Is not super conducive to explosive growth in RE.

    one suggestion is one of you may want to get a RE license and work part time.. get in the game. it cost about 1k to get that.  And if there are any big teams there in that area you get on one of those and let them mentor you... build up some reserves and then move forward.

    as others state  not wanting to be a Debbie downer however those that make millions starting out with nothing is akin to winning the lottery does it happen for sure.. is it common place NO way.

  • Flipper/Rehabber · Colorado Springs, CO · Member since 2016 · 5 posts · 0 votes
    10y

    For me it isn't about becoming super rich or making millions. It's about taking something ugly and run down and making it better. Do I want to make profit- yes. But I am not focused on getting filthy rich. I do think getting a RE license would be good. Having my husband learning to build and remodel homes is also beneficial for us.

  • Flipper/Rehabber · Colorado Springs, CO · Member since 2016 · 5 posts · 0 votes
    10y

    @Russell Gronsky

    Thanks for the encouragement. I know we aren't in the most ideal position financially but we really aren't in the worst either. I'll definitely go back through the podcasts and find some of those people to connect! Thanks for the heads up. 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Madeline Shawcroft  if your husband has skills IE can do a basic remodel.. he should be looking for a money partner... He does the work they put up the money.. in the beginning make the deal super sweat for the investor so you actually can get an investor  ( I see many beginners think they should get an even split etc and can't understand why they can't land a money partner)... get some experience and make some money.. then move it up from there.

  • Investor · Springfield, MO · Member since 2016 · 88 posts · 29 votes
    10y

    @Jay Hinrichs best piece of advice yet. 

    Focus on things that don't require a lot of cold hard cash. Invest in yourself first. Have your husband get his feet wet with someone else's money like Jay suggested. Get your brokers license so you can start managing property or selling it. All of those options are working off someone else's money. 

    I don't think anyone here is trying to be mean or discouraging. Just trying to point you in a possible better direction based on the info you've given. There is no point in wasting time and focusing energy on trying to find a house to flip, dealing with a realtor then a lender, only to find out you are a long way from qualifying for a loan. 

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